BREED TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 19, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of BREED
Technologies, Inc., a Delaware corporation (the "Company"), will be held on
Thursday, November 19, 1998 at 9:00 a.m. in The Frank Lloyd Wright Reception
Center at Florida Southern College, 111 Lake Hollingsworth Drive, Lakeland,
Florida (the "Meeting") for the purpose of considering and voting upon the
following matters:
1. To elect a Board of Directors to serve until the next Annual Meeting of
Stockholders.
2. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Board of Directors is not aware of any other business to be transacted at
the Meeting.
The Board of Directors has fixed the close of business on Monday, September 21,
1998 as the record date for the determination of stockholders entitled to notice
of and to vote at the Meeting and at any adjournment thereof.
Your attention is directed to the Proxy Statement submitted with this Notice.
This Notice is being given at the direction of the Board of Directors.
By order of the Board of Directors,
LIZANNE GUPTILL, Secretary
September 28, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE NEED
BE AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES. IF YOU ATTEND THE
MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
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BREED TECHNOLOGIES, INC.
5300 OLD TAMPA HIGHWAY
LAKELAND, FLORIDA 33811
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 19, 1998
----------------------------------
INTRODUCTION
General
This Proxy Statement is furnished to holders ("Stockholders") of shares of the
common stock, $0.01 par value per share ("Common Stock"), of BREED Technologies,
Inc. (the "Company") in connection with the solicitation of proxies by the
Company's Board of Directors for use at the Annual Meeting of Stockholders of
the Company to be held on Thursday, November 19, 1998 at 9:00 a.m. in The Frank
Lloyd Wright Reception Center at Florida Southern College, 111 Lake
Hollingsworth Drive, Lakeland, Florida, and at any adjournment thereof (the
"Meeting").
This Proxy Statement is first being mailed to Stockholders on or about October
16, 1998. The Company will, upon written request of any Stockholder as of the
Record Date, furnish without charge a copy of its Annual Report on Form 10-K for
the fiscal year ended June 30, 1998, as filed with the Securities and Exchange
Commission, without exhibits. Please address all such requests to the Company,
attention of Investor Relations, P.O. Box 33050, Lakeland, Florida 33807-3050.
Exhibits will be provided upon written request and payment of an appropriate
processing fee.
Record Date
The Board of Directors has fixed the close of business on September 21, 1998 as
the record date ("Record Date") for the determination of Stockholders entitled
to receive notice of and to vote at the Meeting. Only holders of Common Stock as
of the Record Date are entitled to vote at the Meeting or any adjournment
thereof. On the Record Date, there were 36,849,438 shares of Common Stock issued
and outstanding. Each share of Common Stock entitles the holder thereof to one
vote on each of the matters to be voted upon at the Meeting.
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Voting and Proxies
When the enclosed form of proxy is properly executed and returned, the shares it
represents will be voted as directed at the Meeting and any adjournment thereof
or, if no direction is indicated, such shares will be voted in favor of the
proposals set forth in the notice attached hereto. Any Stockholder giving a
proxy has the power to revoke it at any time before it is voted. All proxies
delivered pursuant to the solicitation are revokable at any time at the option
of the persons executing them by giving written notice to the Secretary of the
Company, by delivering a later-dated proxy or by voting in person at the
Meeting. If Common Stock owned by a Stockholder is registered in the name of
more than one person, each person should sign the enclosed proxy. If the proxy
is signed by an attorney, executor, administrator, trustee, guardian or by any
other person in a representative capacity, the full title of the person signing
the proxy should be given and a certificate should be furnished showing evidence
of appointment.
The presence in person or by proxy of the holders of a majority of the shares of
Common Stock issued and outstanding on the Record Date is necessary to
constitute a quorum for the transaction of business at the Meeting and any
adjournment thereof. Under Delaware Law and the Company's Charter and By-laws,
(i) with respect to the election of directors, the affirmative vote of a
plurality of the shares present in person or by proxy at the Meeting is required
to elect directors and (ii) with respect to any other matter that may properly
come before the Meeting, the affirmative vote of a majority of the shares
present in person or by proxy at the Meeting is required to approve any such
matter. At the Meeting, abstentions and broker non-votes will be treated as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum. Abstentions will not count as either a vote for or against
any nominee in connection with the election of directors but will count in
determining the minimum number of affirmative votes required for approval of any
other matter that properly comes before the Meeting and, accordingly, will have
the effect of a vote against any such matter. Broker non-votes will not be
counted as votes for or against matters presented for Stockholder approval at
the Meeting.
ELECTION OF DIRECTORS
(Proposal 1)
Nominees for Election as Directors
The Company's Board of Directors consists of seven directors, each of whose term
will expire on the date of the Meeting. The Board of Directors has nominated
seven persons, all of whom have agreed to stand for election at the Meeting.
Each nominee has agreed to seek election as a director of the Company and to
hold office until the next Annual Meeting of Stockholders or until his/her
successor is duly elected and qualified. If any of the nominees become
unavailable to serve as a director, the Board of Directors may, unless the Board
of Directors by resolution provides for a lesser number, designate substitute
nominees. If that occurs, the persons named in the accompanying proxy will vote
the proxy for the substitute nominee or nominees. The Board of Directors has no
reason to believe that any of the nominees will be unavailable for election as a
director. In no event, however, can a proxy be voted to elect more than seven
directors. The following table sets forth certain information with respect to
the nominees:
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Principal Occupation, Other Business
Director Experience During Past Five Years
Name Age Since and Other Directorships
- - ---- --- ----- ------------------------------------
Johnnie Cordell Breed 54 1986 Chairman of the Board of Directors
and Chief Executive Officer of the
Company since March 1998;
Co-Chairman and Chief Executive
Officer of the Company from
September 1997 through March 1998;
President and Chief Operating
Officer of the Company from
September 1995 through September
1997; Vice Chairman of the Company
from 1986 through August 1995; Vice
President of Breed Corporation, a
former defense contractor since
1986; Secretary and Treasurer of
Transcor, Inc., a provider of
transportation travel services,
since 1982, and currently the sole
stockholder of Transcor, Inc.; a
Trustee of Columbia College of South
Carolina; Mrs. Breed is the wife of
Allen K. Breed.
Charles J.
Speranzella, Jr. 42 1997 Vice Chairman, President and Chief
Operating Officer of the Company
since June 1998; Vice Chairman and
General Counsel of the Company from
September 1997 through June 1998;
Executive Vice President, Worldwide
Operations and General Counsel from
March 1997 to September 1997;
Executive Vice President, General
Counsel and Secretary of the Company
from May 1995 to September 1997;
General Counsel and Assistant
Secretary of the Company from
September 1994 to May, 1995. Various
senior positions with Matra
Hachette's Fairchild Space and
Defense Corporation and Martin
Marietta from 1979 until joining the
Company in 1994.
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Larry W. McCurdy 63 1992 President of the Automotive
Aftermarket Group of Dana
Corporation, an automotive
components supplier, since July
1998. Chief Executive Officer and
President of Echlin, Inc from March
1997 to July 1998; Executive Vice
President of Cooper Industries, a
manufacturer of automotive products,
from April 1994 to March 1997;
President and Chief Executive
Officer of Moog Automotive, Inc., a
manufacturer of automotive
aftermarket products, from December
1985 to April 1994; President and
Chief Operating Officer of Echlin,
Inc. from 1983 to 1985; Director of
Lear Seating Corp. and Mohawk
Industries, Inc.; a Trustee of
Millikin University.
Allen K. Breed 71 1986 Chairman Emeritus and Director of
the Company since March 1998;
Co-Chairman of the Board of
Directors of the Company from
September 1997 through March 1998;
Chairman and Chief Executive Officer
of the Company from December 1986
through September 1997; Chairman and
President of Breed Corporation, a
former defense contractor, since
1961; Mr. Breed is the husband of
Johnnie Cordell Breed.
Alberto Negro 60 1997 President, Chief Executive Officer
and Director of MecaPlast USA since
March 1998; retired as Chief
Executive Officer of Fiat Auto USA,
Inc. in June 1997 after 29 years of
service with Fiat; Past-Chairman of
SAE Overseas Meeting Group.
Robert W. Shower 61 1997 Director of Lear Corporation, a
manufacturer of automotive
interiors; Highlands Insurance
Group, a property and casualty
insurer; Edge Petroleum Corporation,
an oil and gas exploration company;
and Nuevo Energy Company, an oil and
gas exploration company; Executive
Vice President and Chief
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Financial
Officer of Seagull Energy
Corporation, an oil and gas
exploration and production company
from December 1993 until April 1996;
a director from May 1992 until July
1996, and Senior Vice President and
Chief Financial Officer from March
1992 until December 1993; Senior
Vice President, Corporate
Development for Albert Fisher, Inc.,
a fresh fruit and vegetable
distribution company, from 1991
until 1992.
Dr.-Ing. Franz
Wressnigg 55 1997 Group President of Siemens
Automotive, an automotive parts
manufacturer, since 1993; director
of Siemens Austria, Vienna, a
division of Siemens AG, from 1989
until 1993; various management
positions with Siemens since 1967.
For information relating to shares of Common Stock owned by each of the
directors, see "Common Stock Ownership of Certain Beneficial Owners and
Management".
Recommendation of the Board of Directors
The Board of Directors of the Company recommends a vote FOR Johnnie Cordell
Breed, Charles J. Speranzella, Jr., Larry W. McCurdy, Allen K. Breed, Alberto
Negro, Robert W. Shower and Dr.-Ing. Franz Wressnigg to hold office until the
Annual Meeting of Stockholders in 1999 or until their respective successors are
elected and qualified. Proxies received by the Board of Directors will be so
voted unless Stockholders specify in their proxies a contrary choice.
Board of Director and Committee Meetings
The Board of Directors met 11 times (including by telephone conference) during
fiscal 1998. All directors attended at least 75% of the meetings of the Board of
Directors and the committees on which they served in fiscal 1998. The Board of
Directors has an Audit Committee and a Compensation Committee. The Audit
Committee, whose members are Messrs. Shower and Wressnigg, recommends
independent auditors, reviews the audit of the Company's accounts, monitors the
effectiveness of the audit and evaluates the scope of the audit. The
Compensation Committee, whose members are Messrs. McCurdy and Negro, reviews and
recommends salaries and other compensatory benefits for the principal officers
of the Company. During fiscal 1998, the Audit Committee met 4 times and the
Compensation Committee met 4 times. The Board of Directors of the Company
presently does not have a standing nominating committee or committees performing
similar functions. Through the date of the Proxy Statement, all functions
normally performed by such a committee have been carried out by the full Board
of Directors.
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Director Compensation
As compensation for serving on the Board of Directors, members of the Board of
Directors who are not employees of the Company are paid $5,000 for attendance at
each Board meeting, $1,250 for participation in each telephonic Board meeting,
$1,000 for each committee meeting and $2,000 for serving as chairman of any
committee of the Board. These fees are in addition to participation in the
Company's 1992 Directors Stock Option Plan (the "1992 Director Plan").
Under the 1992 Director Plan, directors of the Company who are not employees of
the Company or any subsidiary are eligible to receive non-qualified options to
purchase shares of Common Stock of the Company. Under the 1992 Director Plan,
options are automatically granted to eligible directors after their election on
the date of each annual meeting of Stockholders. The number of shares of Common
Stock covered by each director's options is determined by dividing $50,000 by
the fair market value of the Company's Common Stock on the date of grant. Such
options vest on the first anniversary of the date of grant (or, if earlier, the
day prior to the first Annual Meeting of Stockholders of the Company following
the date of grant). The exercise price of options granted under the 1992
Director Plan equal the fair market value of the Common Stock on the date of
grant. On November 20, 1997, options to purchase 2,685 shares of Common Stock at
an exercise price of $18.625 per share were granted to each of Messrs. McCurdy,
Negro and Shower.
Certain Transactions
Since November 1992, the Company has engaged the services of Transcor, Inc.
("Transcor") to support its travel requirements. Transcor has provided the
Company with airline tickets, computer services, ticket stock and car and hotel
rentals. Johnnie Cordell Breed is the sole stockholder of Transcor. During
fiscal 1998, the Company paid Transcor gross commissions of $72,303 with respect
to $1,450,081of business. In addition, pursuant to the terms of a travel
management agreement, the Company is entitled to share in a portion of
Transcor's revenues derived from the Company. The Company incurs no cost or fees
in connection with this arrangement. The Company believes that the terms of its
relationship with Transcor are as favorable as those that are available though
other travel companies.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock as of September 15, 1998 by (i) each person
known to the Company to beneficially own more than 5% of the outstanding Common
Stock, (ii) each of the directors and director nominees, (iii) each of the Named
Executive Officers (as defined herein, and (iv) all directors and executive
officers of the Company as a group.
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Beneficial Ownership of
Common Stock
----------------------------
Number of Percent of
Name of Beneficial Owner (1) Shares (2) Class (3)
- - ---------------------------- ----------- ----------
Executive Officers and Directors:
Johnnie Cordell Breed ................. 8,477,850(4) 23.01%
Charles J. Speranzella, Jr ............ 58,244(5) *
Robert Rapone ......................... --(6) --
Frank Gnisci .......................... 5,000(7) *
Allen K. Breed ........................ 8,617,552(8) 23.39%
Larry W. McCurdy ...................... 13,349(9) *
Alberto Negro ......................... 1,000 *
Robert Shower ......................... 2,000 *
Dr.-Ing. Franz Wressnigg .............. -- --
All executive officers and directors,
as a group (11 persons) ....... 17,174,995(10) 46.61%
Other 5% Stockholders:
A. Breed, Ltd. ........................ 8,477,750(11) 23.01%
J. Breed, Ltd. ........................ 8,477,750(11) 23.01%
Capital Research and Management Company 2,647,980(12) 7.19%
FMR Corp. ............................. 3,442,030(13) 9.29%
Pioneering Management Corporation ..... 3,109,400(14) 8.44%
Siemens Aktiengesellschaft ............ 4,883,227(15) 13.25%
- - ----------
* Less than 1%
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(1) The business address for Mr. and Mrs. Breed is 5300 Old Tampa Highway,
Lakeland, Florida 33811.
(2) Under the rules of the Securities and Exchange Commission, a person is
deemed to beneficially own securities if he or she has or shares the power
to vote or dispose, or to direct the vote or disposition, of such
securities or has the right to acquire such beneficial ownership within 60
days. Under these rules, more than one person may be deemed to beneficially
own the same securities and a person may be deemed to beneficially own
securities as to which he or she has no pecuniary interest. Unless
otherwise indicated, each person or entity named in the table has sole
voting and investment power with respect to all shares of Common Stock
listed as beneficially owned by such person or entity.
(3) In calculating the percentage ownership for a given individual or group,
the number of shares of Common Stock outstanding includes unissued shares
subject to options, warrants, rights or other conversion privileges
exercisable on or before November 14, 1998 held by such individual or
group, but are not deemed outstanding by any other person or group.
(4) Includes 8,477,750 shares held by J. Breed, Ltd., a Texas limited
partnership. J. Breed, Inc., a Texas corporation, is the general partner of
J. Breed, Ltd. Mrs. Breed is the sole stockholder and director of J. Breed,
Inc. and, consequently, is deemed to beneficially own all of the shares of
Common Stock held by J. Breed, Ltd. Also includes 100 shares of Common
Stock held as a joint tenant with Mrs. Breed's spouse.
(5) Includes 56,864 shares of Common Stock which may be acquired upon the
exercise of stock options that are or will become exercisable on or before
November 14, 1998. Excludes 400,000 shares of Common Stock that may be
acquired pursuant to stock options exercisable if the trading price of the
Common Stock exceeds certain specified levels.
(6) Excludes 400,000 shares of Common Stock that may be acquired pursuant to
stock options exercisable if the trading price of the Common Stock exceeds
certain specified levels.
(7) Includes 5,000 shares of Common Stock which may be acquired upon the
exercise of stock options that are or will become exercisable on or before
November 14, 1998.
(8) Includes 8,477,750 shares of Common Stock held by A. Breed, Ltd., a Texas
limited partnership. A. Breed, Inc., a Texas corporation, is the general
partner of A. Breed, Ltd. Mr. Breed is the sole stockholder and director of
A. Breed, Inc. and, accordingly, is deemed to beneficially own all of the
shares of Common Stock held by A. Breed, Ltd. Also includes 100 shares of
Common Stock held as a joint tenant with Mr. Breed's spouse, and 139,702
shares held by the Breed Charitable Foundation. Mr. Breed is a trustee of
the Breed Charitable Foundation and shares the power to vote and dispose of
the Common Stock beneficially owned by the Foundation.
(9) Includes 13,349 shares of Common Stock which may be acquired upon the
exercise of stock options that are or will become exercisable on or before
November 14, 1998.
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(10) Includes 17,174,995 shares of Common Stock which may be acquired by
executive officers and directors upon the exercise of stock options which
are or will become exercisable on or prior to November 14, 1998.
(11) A. Breed, Ltd. and J. Breed, Ltd. are both located at 1366 Winding Way,
Cave Rock Estates, Nevada 89413.
(12) This information is based on a Schedule 13G filed with the Securities and
Exchange Commission on July 9, 1998. Capital Research and Management
Company's address is 333 South Hope Street, Los Angeles, CA 90071.
(13) Excludes 80,000 shares of Common Stock beneficially owned by Fidelity
International Limited ("FIL"). Prior to June 30, 1998, FIL was a wholly
owned subsidiary of Fidelity Management & Research Company, which is a
wholly owed subsidiary of FMR Corp. On June 30, 1998, Fidelity Management &
Research Company distributed all of the outstanding shares of FIL as a
dividend to the shareholders of FMR Corp. FMR Corp. does not have the power
to vote or dispose of these 80,000 shares and has taken the position that
it does not beneficially own such shares. This information is based on
Amendment No. 1 to Schedule 13G filed with the Securities and Exchange
Commission on March 10, 1998. FMR Corp's address is 82 Devonshire Street,
Boston, MA 02109.
(14) This information is based on Amendment No. 2 to Schedule 13G filed with the
Securities and Exchange Commission on January 5, 1998. Pioneering
Management Corporation's address is 60 State Street, Boston, MA 02109.
(15) Includes One Series A preferred Share, which is convertible into one share
of Common Stock. Siemens Aktiengelsellschaft is located at
Wittelsbacharplatz 2, D-80333, Munich, Germany.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") all executive officers, directors and persons that beneficially
own more than 10% of the Common Stock of the Company are required to file
reports regarding the ownership of such Common Stock, options and stock
appreciation rights and any changes in that ownership with the Securities and
Exchange Commission (the "SEC"). Specific due dates for these reports have been
established, and the Company is required to report in this Proxy Statement any
failure to comply therewith during the fiscal year ended June 30, 1998. Based
solely upon a review of the copies of such reports furnished to the Company and
certain representations of such persons, the Company believes that all of these
filing requirements were satisfied.
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table The following table sets forth certain information
concerning the compensation earned by the Chief Executive Officer of the Company
and each of the four other most highly compensated executive officers of the
Company (collectively, the "Named Executive Officers") during fiscal 1996, 1997
and 1998.
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<TABLE>
<CAPTION>
Summary Compensation Table Long Term
Compensation
Annual Compensation (1) ------------
---------------------------------------------------------- Awards
------
Securities
Underlying
Name and Principal Fiscal Other Annual Options/SARS All other
Position Year Salary ($) Bonus ($)(2) Compensation($)(3) (#)(4) Compensation($)(5)
-------- ---- ---------- ------------ ------------------ ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Johnnie Cordell Breed .............. 1998 $414,299 $ 0 $ 27,341 0 $ 4,500
Chief Executive Officer 1997 $331,749 $287,950 $ 17,115 0 $ 4,500
1996 $283,032 $220,000 $ 44,376 0 $ 4,500
Charles J. Speranzella, Jr.......... 1998 $303,195 $ 0 $ 25,339 458,804 $ 4,500
Vice Chairman, President 1997 $210,784 $115,000 $ 58,881 7,485 $ 4,500
And Chief Operating Officer 1996 $198,672 $ 43,125 $ 74,461 90,607 $ 40,661
Robert M. Rapone (6) ............... 1998 $236,550 $ 0 $ 75,005 400,000 $ 4,500
Executive Vice President, $ 4,500
Worldwide Operations $ 4,500
Frank J. Gnisci (6) ................ 1998 $157,706 $ 0 $ 27,459 75,000 $ 3,000
Executive Vice President
And Chief Financial Officer
Allen K. Breed ..................... 1998 $342,119 $ 0 $ 3,419 0 $ 4,500
Former Chief 1997 $456,404 $456,404 $ 32,064 0 $ 4,500
Executive Officer 1996 $455,812 $441,000 $ 36,466 0 $ 4,500
Fred J. Musone (7) ................. 1998 $315,393 $ 0 $ 33,906 0 $ 4,500
Former President and
Chief Operating Officer
</TABLE>
- - ----------
(1) The aggregate amount of perquisites and other personal benefits, if any,
did not exceed the lesser of $50,000 or 10% of the total annual salary and
bonus reported for each Named Executive Officer and has therefore been
omitted.
(2) Amounts in this column represent bonuses earned under the Company's
employee incentive program for the respective fiscal years. Amounts earned
in any fiscal year are payable in the following fiscal year.
(3) Amounts in this column represent the value of certain executive benefits
provided by the Company.
(4) The Company does not have a long-term compensation program that includes
long-term incentive payouts. However, the 1994 Stock Incentive Plan adopted
by the Stockholders on November 17, 1994, provides participants under the
Plan performance-based compensation in the form of incentive stock options
or restricted stock awards.
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(5) Amounts shown in this column represent the Company's contributions under
its tax-qualified and tax-deferred 401(k) savings plan, taxes paid by the
Company, and income realized from the exercise of incentive stock options.
The Company's 401(k) matching contribution was $4,500 to each of Messrs.
Breed, Speranzella, Rapone, Gnisci and Mrs. Breed.
(6) Joined the Company in September 1997.
(7) Mr. Musone joined the Company in September 1997 and resigned as President
and Chief Operating Officer of the Company as of June 19, 1998.
Option Grants Table. The table below sets forth certain information relating to
options granted during fiscal 1998 to each Named Executive Officer. No stock
appreciation rights were granted to the executive officers during fiscal year
1998.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Individual Grants (1)
---------------------------------------------------
Potential Realizable
Number of % of Total Value at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Price Appreciation for
Options Employees Exercise Option Term ($)
Granted in Fiscal Price Per Expiration --------------------------
(#)(1) Year Share($) Date 5% 10%
---------- ----------- --------- ---------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Johnnie C. Breed ......................... -- -- -- -- -- --
Charles J. Speranzella, Jr .............. 8,804 0.68% $ 24.06 09/01/2007 $ 133,215 $ 337,593
400,000 31.11% 21.25 05/20/2007 5,345,604 13,546,811
50,000 3.89% 19.1875 05/20/2008 603,346 1,528,997
Robert M. Rapone ......................... 400,000 31.11% $ 21.25 09/01/2007 $ 5,345,604 $13,546,811
Frank J. Gnisci .......................... 25,000 1.94% $ 21.25 05/20/2008 $ 334,100 $ 846,676
50,000 3.89% 19.1875 09/01/2007 603,346 1,528,997
Allen K. Breed ........................... -- -- -- -- -- --
Fred J. Musone ........................... -- -- -- -- -- --
</TABLE>
- - -------------
(1) All of the options are options to purchase Common Stock of the Company
granted under the 1994 Stock Incentive Plan.
Aggregated Options Table. The table below sets forth certain information with
respect to options held at the end of fiscal 1998 by each Named Executive
Officer. No options were exercised during fiscal 1998.
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Aggregated Option/SAR Exercises in
Last Fiscal Year and Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying In-the-Money
Unexercised Options/SARS Options/SARS at
at Fiscal Year-End (#) Fiscal Year-End ($)
(Exercisable/ (Exercisable/
Unexercisable) Unexercisable)(1)
------------------------ -------------------
<S> <C> <C>
Johnnie Cordell Breed ........................ -- --
Charles J. Speranzella, Jr ................... 44,148/521,081 --
Robert M. Rapone ............................. 0/400,000 --
Frank J. Gnisci .............................. 0/75,000 --
Allen K. Breed ............................... -- --
Fred J. Musone ............................... -- --
</TABLE>
- - -------------
(1) Value based on the last price per share ($15.3125) of the Company's Common
Stock on June 30, 1998, as reported on the New York Stock Exchange
Composite Tape, less the exercise price.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are Messrs. McCurdy and Negro. No
executive officer of the Company has served as a director or member of the
Compensation Committee (or other committee serving an equivalent function) of
any other entity, one of whose executive officers served as a director of or
member of the Compensation Committee of the Company.
REPORT OF THE COMPENSATION COMMITTEE
Overview of Executive Compensation Program. The Compensation Committee is
responsible for, among other things, (i) reviewing and approving the Company's
executive compensation program, (ii) determining the compensation for the
Company's executive officers and (iii) administering the Company's employee
benefit plans including its stock option plans, employee incentive plan and 401k
plan.
Objectives of the Executive Compensation Program. The executive compensation
program's objectives are to attract, retain and motivate a high quality
executive team and to encourage that team to achieve profitable growth and
thereby increase Stockholder value. To meet these objectives, the Company's
executive compensation packages are intended to provide: (i) an overall level of
compensation that is competitive; and (ii) incentive bonuses and stock-related
compensation that reward achievement of business plan goals and earnings
objectives.
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Status and Outlook for Executive Compensation. The Compensation Committee
approves annual compensation guidelines for the Company's executives which
include salary ranges, salary increase percentage guidelines and incentive
compensation standards and formulas tied to achievement of corporate goals. The
Compensation Committee also establishes guidelines for the grant of
non-executive stock-related compensation. In addition, the Compensation
Committee establishes the compensation of the Chairman and President as well as
approves the compensation of all other executive officers.
The Compensation Committee believes that the total compensation of the Company's
executive officers is competitive with executive compensation of manufacturing
companies comparable in size to the Company. In view of the growth of the
Company through acquisitions, however, the Compensation Committee will continue
to verify the competitiveness of total executive compensation while being
sensitive to the financial position of the Company. In reviewing executive
compensation, the Compensation Committee determined that it should shift its
compensation strategy toward a greater reliance on options and incentive
bonuses, and lesser reliance on salary, and has moved accordingly. In order to
add even more emphasis on increasing Stockholder value, the main factor in the
determination of any fiscal 1999 bonuses will be the Company's consolidated
operating profit.
Determination of Compensation. For fiscal 1998, management set overall
compensation within the range of compensation of executive officers with
comparable qualifications, experience and responsibilities in the same or
similar business and of comparable size and success. In addition to external
market data, merit increases and bonuses were determined based on individual
performance, the Company's financial performance and the achievement of certain
non-financial corporate goals.
Determination of Incentive Compensation. Under existing policy, bonus levels are
determined as a percentage of base salary for each executive position dependent
upon current salary grade. Based upon the criteria established for the fiscal
1998 bonus incentive plan, bonuses were not awarded during fiscal 1998 to
eligible executive officers.
Stock Options. Stock options were granted to executive officers eligible for the
Company's Long Term Incentive Program under the provisions of the 1994 Stock
Incentive Plan at an option price equal to market value of the Company's Common
Stock on the date of grant and vest over a three-year period. Accordingly, the
stock options are intended to motivate key management personnel to improve
long-term performance.
Summary of Compensation of Chief Executive Officer. In fiscal 1998, the
Company's Chairman and Chief Executive Officer, Johnnie C. Breed received a base
salary of $456,400. Ms. Breed was not paid a bonus in fiscal 1998. Ms. Breed's
bonus, as all other executive officers that participate in the bonus program, is
based on the financial performance of the Company.
Employment and Severance Agreements. The Company is a party to employment
agreements with Charles J. Speranzella, Jr. and Robert M. Rapone, which were
entered into on October 27, 1997 and September 2, 1997, respectively (the
"Employment Agreements"). Each Employment Agreement provides for the employee to
devote his full business time and attention to the Company, and terminates four
years after its inception unless earlier terminated as described below.
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Mr. Speranzella's employment agreement (the "Speranzella Agreement") provides
that he will serve as the Vice Chairman of the Board of Directors of the
Company. The Speranzella Agreement provides for an annual base salary of
$325,000 per year which may be increased at the discretion of the Board of
Directors, as well as an annual bonus of up to 50% of his base salary which may
be paid to Mr. Speranzella at the discretion of the Board of Directors.
Mr. Rapone's employment agreement (the "Rapone Agreement") provides that he will
serve as the Executive Vice President of Worldwide Operations. The Rapone
Agreement provides for an annual base salary of $300,000 per year which may be
increased at the discretion of the Board of Directors, as well as an annual
bonus of up to 45% of his base salary which may be paid to Mr. Rapone at the
discretion of the Board of Directors. Each Employment Agreement also provides
for reimbursement of reasonable business expenses, an automobile allowance,
health insurance and, in the case of Mr. Rapone, payment of relocation expenses.
Under the provisions of the Employment Agreements, both Mr. Speranzella and Mr.
Rapone have been granted options to purchase 400,000 shares of Common Stock of
the Company at $21.25 per share (the "Incentive Options"). The Incentive Options
vest over a three-year period based upon the price of the Company's Common Stock
reaching certain targeted levels. Additionally, the Employment Agreements
provide that Mr. Speranzella and Mr. Rapone are to receive on each of the first,
second and third anniversaries of their Employment Agreements options to
purchase 100,000 shares of Common Stock at the market price of the Company's
Common Stock on the date of the grant (the "Annual Options"). Each of the Annual
Options vests one year from the date of the grant.
The Employment Agreements are terminable upon the death or disability of the
employee, by the Company for "Cause" (as defined in the Employment Agreements),
by the Company without Cause, by the employee in the event that the employee's
base salary or responsibilities are reduced by the Company ("Changed
Circumstances"), or by the employee on the occurrence of a change in control (as
defined in the Employment Agreements). Each Employment Agreement provides that,
in the event the employee's employment is terminated without Cause, for a change
in control or for Changed Circumstances, such employee is to be paid as
severance all base salary (exclusive of bonus), auto allowance, health and
welfare benefits, 401k company contributions through the end of the Employment
Agreement term. If the employee is terminated as a result of a change in
control, the employee is to be paid an amount equal to three times his annual
base salary in effect at the time of termination, plus an amount equal to three
times the amount of the highest annual bonus awarded to the employee during the
three immediately preceding years as well as other allowances as discussed in
the preceding sentence. The Employment Agreements also subject the employees to
non-compete, non-solicitation and confidentiality restrictions.
During the past fiscal year, the Company was also party to an employment
agreement with Fred J. Musone which was entered into on September 2, 1997 (the
"Musone Agreement") which provides for Mr. Musone to be retained by the Company
as its President and Chief Operating Officer. On June 18, 1998 the Company and
Mr. Musone amended the Musone Agreement whereby Mr. Musone resigned from the
Company and received from the Company: (i) a severance allowance of $986,524
payable in three installments through January 2, 1999, and (ii) continuing
health and welfare benefits payable by the Company for 24 months following the
date of resignation. Mr. Musone is subject to continuing non-compete,
non-solicitation and confidentiality restrictions.
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The Company is party to a severance agreement with Frank J. Gnisci dated August
12, 1997 (the "Severance Agreement"). Under the terms of the Severance
Agreement, if the Company terminates Mr. Gnisci's employment for any reason
other than cause (as defined in the Severance Agreement) or substantially
reduces Mr. Gnisci's base salary or job functions, Mr. Gnisci is entitled to
receive from the Company a continuation of his then current annual base salary
and certain health and insurance benefits for a period of up to twelve months.
If during the twelve month period Mr. Gnisci accepts employment with an annual
base salary less than the annual base salary paid to him by the Company, the
Company is obligated to pay to Mr. Gnisci the difference between such salary
levels. In the event Mr. Gnisci accepts employment with an annual base salary in
excess of that paid to him by the Company, the Company is not obligated to make
any further severance payment to Mr. Gnisci.
Compliance with Internal Revenue Code Section 162(m). The Compensation Committee
has reviewed the applicability of Section 162 (m) of the Internal Revenue Code
of 1986, as amended (the "Code"), which disallows a tax deduction for
compensation to an executive officer in excess of $1.0 million per year. The
Compensation Committee does not anticipate that compensation subject to this
threshold will be paid to any executive officer of the Company during fiscal
1998. The Committee intends to periodically review the potential consequences of
Section 162 (m) and may structure the performance-based portion of its executive
officer compensation to comply with certain exemptions provided in Section 162
(m).
Compensation Committee
LARRY W. MCCURDY
ALBERTO NEGRO
The foregoing report should not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities act of 1933, as amended, or under the Exchange Act
(together, the "Acts") except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total stockholder return (assuming
the reinvestment of dividends) on the Common Stock of the Company with the
cumulative total return on (i) the Standard & Poor's 500 Composite Index and
(ii) a peer group index* selected by the Company which includes six publicly
traded companies within the Company's industry. The table assumes the investment
of $100 on November 13, 1992, in the Company's Common Stock, the Standard and
Poor's 500 Composite Index and in the peer group index and, in each case, the
reinvestment of all dividends.
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COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG BREED TECHNOLOGIES, INC. THE S&P 500 INDEX
AND A PEER GROUP
[GRAPHIC OMITTED]
*The peer group index reflects the stock performance of the following companies:
Morton International ASP/Autoliv, Inc., Simpson Industries, Inc., TRW, Inc.,
OEA, Inc., Superior Industries International, Inc. and Modine Manufacturing
Company.
The stock price performance graph shall not be deemed incorporated by reference
by any general statements incorporating by reference this Proxy Statement into
any filing under the Acts except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any proposal that a Stockholder intends to present at the 1999 Annual Meeting of
Stockholders must be submitted to the Secretary of the Company at its offices,
P.O. Box 33050, 5300 Old Tampa Highway, Lakeland, Florida 33807-3050, no later
than June 15, 1999, in order to be considered for inclusion in the Proxy
Statement relating to that meeting. A Stockholder is eligible to present
proposals if, at the time he or she submits the proposals, the Stockholder shall
be a beneficial owner or record holder of at least 1% or $1,000 in market value
of Common Stock and has held such shares for at least one year, and the
Stockholder continues to own such shares through the date on which the meeting
is held.
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OTHER MATTERS
The Company will bear the costs of soliciting proxies. In addition to
solicitations by mail, the Company's directors, officers and regular employees
may, without additional remuneration, solicit proxies by telephone, telegraph,
facsimile and personal interviews. The Company will also request brokerage
houses, custodians, nominees and fiduciaries to forward copies of the proxy
material to those persons for whom they hold shares and request instructions for
voting the Proxies. The Company will reimburse such brokerage houses and other
persons for their reasonable expenses in connection with this distribution.
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING. WHETHER
OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS APPRECIATED.
STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY EVEN THOUGH
THEY HAVE SENT IN THEIR PROXIES.
By Order of the Board of Directors,
LIZANNE GUPTILL, Secretary
September 28, 1998
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